| Ghandhara Leasing Company Limited |
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| Annual
Report 1998 |
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| Contents |
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| Company
Information |
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| Notice
of Annual General Meeting |
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| FinanciaI
Highlights |
|
| Graphic
Presentation |
|
| Pattern
of Shareholding |
|
| Chairman's
Review |
|
| Directors'
Report |
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|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
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| Company
Information |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Raza Kuli Khan Khattak |
Chairman |
|
Nominee of GNL* |
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|
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| Mr.
Ahmed Kuli Khan Khattak |
|
Nominee of GNL |
|
| Mr.
Humayaun Sultan Mufti |
|
Nominee of GNL |
|
| Dr.
Adil Sultan Mufti |
|
|
Nominee of GNL |
|
| Mr.
Razi-ur-Rahman Khan |
|
Nominee of NIT |
|
| Mr.
Nasim Beg |
|
|
Nominee of NIT |
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| Mr.
Michio Kuwahara |
|
|
Nominee of Marubeni |
|
| Mr.
Mushtaq Ahmed Khan |
|
|
Nominee of Bibojee |
|
| Mr.
K.U. Rahman |
|
|
Nominee of Bibojee |
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| Mr.
A.G. Budhani |
|
|
Nominee of ICP |
|
| Mr.
Haroon A. Zuberi |
|
Chief Executive |
|
| *GNL:
Ghandhara Nissan Limited |
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|
| Acting
Company Secretary |
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|
Legal Advisors |
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| Mr.
Muhammad Tahir Salam |
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|
Shaukat Law Associates, |
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|
|
|
|
217, Central Hotel
Annexe, |
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| Registered
Office |
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|
Abdullah Haroon Road, |
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| 2nd
Floor, State Life Building, |
|
|
Karachi. |
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| 34,
The Mall, Peshawar Cantt. |
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|
Ph: 5681495, 5686223 |
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| Karachi
Office |
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|
Share Registrars |
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| l-D,
3rd Floor, Sunset Tower, |
|
THK Associates (Pvt) Ltd. |
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| Sunset
Boulevard, Karachi. |
|
Ground Floor, |
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| Ph:
5890751-5, |
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|
Shaikh Sultan Trust. |
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| Fax:
5888513, 5880687 |
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|
Building No, 2. |
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|
|
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|
Beaumont Road. |
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| Bankers
to the Company |
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|
Karachi-75530 |
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| American
Express Bank Ltd. |
|
Ph: 5686658, 5685687 |
|
| Allied
Bank of Pakistan Ltd. |
|
| National
Bank of Pakistan Ltd. |
|
| Standard
Chartered Bank |
|
| The
Bank of Tokyo |
|
| The
Bank of Khyber |
|
| The
Bank of Punjab |
|
|
| Auditors |
|
| Taseer
Hadi Khalid & Co, |
|
| Chartered
Accountants, |
|
| 1st Floor, |
|
| Shaikh
Sultan Trust, |
|
| Building
No, 2, |
|
| Beaumont
Road |
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| Karachi-75530 |
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| Ph:
5681912, 5682290, 5680934, 5671761-63 |
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| Notice
of Annual General Meeting |
|
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| Notice
is hereby given that the Seventh Annual General Meeting of the Company will
be held on 31st |
|
| December,
1998 at 2nd Floor, State Life Building, 34, The Mall, Peshawar Cantt.,
Peshawar at 12:00 |
|
| noon
to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
| -
To receive, consider and adopt the Audited Accounts of the company for the
year ended June |
|
| 30th
1998, together with the Directors' and Auditors' Report thereon. |
|
|
| -
To appoint Auditors and fix their remuneration. The present Auditors Messrs.
Taseer Hadi Khalid & |
|
| Co.,
Chartered Accountants, retire and being eligible, offer themselves for
re-appointment. |
|
|
| OTHER
BUSINESS |
|
| To
transact any other business as may be placed before the meeting with the
permission of the |
|
| Chairman. |
|
|
By Order of the Board |
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|
|
|
|
|
Muhammad Tahir Salam |
|
|
|
Acting Company |
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| Karachi:
9th December, 1998 |
|
Secretary |
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|
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| NOTES: |
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| 1.
The share transfer books of the company will remain closed from 29th
December, 1998 to 31st |
|
| December,
1998 (both days inclusive). |
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|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/her |
|
| proxy
to attend the meeting and vote for him/her. No person shall act as a proxy
who is not a |
|
| member
of the company. Proxies in order to be effective must be received by the
Company not |
|
| less
than 48 hours before the meeting. |
|
|
| 3.
Shareholders are requested to immediately notify the Company of any change in
their |
|
| addresses. |
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| Financial
Highlights |
|
|
|
|
30 June |
30 June |
30 June |
31 Dec |
31 Dec |
31 Dec |
|
|
|
1998 |
1997 |
1996 |
1994 |
1993 |
1992 |
|
|
|
|
(18 Months) |
|
|
| Balance
sheet (Rupees in million) |
|
| Net
Investment in Leases |
512.914 |
519.822 |
496.881 |
339.581 |
191.289 |
55.522 |
|
| Total
Equity |
|
147.942 |
172.530 |
160.771 |
72.886 |
66.552 |
55.162 |
|
| Total
Assets |
|
612.672 |
631.294 |
581.052 |
437.996 |
259.025 |
126.177 |
|
| Break-up
value (Amount in rupees) |
17.91 |
20.89 |
19.46 |
14.57 |
13.31 |
11.03 |
|
|
|
|
| Income
Statement (Rupees in million) |
|
| Gross
Income |
|
92.169 |
99.826 |
137.603 |
66.416 |
30.091 |
8.966 |
|
| Financial
charges |
|
72.709 |
67.343 |
87.670 |
37.514 |
11.710 |
0.364 |
|
| Other
expenses |
|
41.297 |
16.128 |
26.312 |
12.087 |
6.850 |
3.440 |
|
| Net
(Loss)/Profit |
|
(24.588) |
11.759 |
22.932 |
16.315 |
11.390 |
5.162 |
|
|
| Lease
portfolio (Percentage) |
|
| Plant
& Machinery |
|
56.96 |
73.10 |
66.33 |
77.00 |
78.60 |
74.00 |
|
| Equipment |
|
9.20 |
10.31 |
9.23 |
11.50 |
9.20 |
10.80 |
|
| Private
vehicles |
|
8.79 |
7.05 |
9.67 |
11.00 |
9.40 |
8.10 |
|
| Commercial
vehicles |
|
25.05 |
9.54 |
14.77 |
0.50 |
2.80 |
7.10 |
|
|
|
|
|
|
|
|
|
|
|
| Pattern
of Shareholding |
|
|
| No. of |
Shareholding |
Total |
|
|
| Shareholders |
From |
To |
shares held |
|
|
| 83 |
1 |
100 |
8,300 |
|
|
| 395 |
101 |
500 |
173,300 |
|
|
| 158 |
501 |
1,000 |
154,500 |
|
|
| 66 |
1,001 |
5,000 |
153,000 |
|
|
| 21 |
5,001 |
10,000 |
165,100 |
|
|
| 8 |
10,001 |
15,000 |
94,000 |
|
|
| 3 |
15,001 |
20,000 |
59,000 |
|
|
| 1 |
25,001 |
30,000 |
28,000 |
|
|
| 2 |
30,001 |
35,000 |
64,500 |
|
|
| 2 |
50,001 |
55,000 |
105,800 |
|
|
| 1 |
120,001 |
125,000 |
125,000 |
|
|
| 1 |
295,001 |
300,000 |
300,000 |
|
|
| 1 |
335.00 |
340,000 |
337,700 |
|
|
| 1 |
495,001 |
500,000 |
500,000 |
|
|
| 1 |
1,245,001 |
1,250,000 |
1,250,000 |
|
|
| 1 |
1,840,001 |
1,845,000 |
1,841,500 |
|
|
| 1 |
2,895,001 |
2,900,000 |
2,900,000 |
|
|
| ---------- |
|
---------- |
|
| 746 |
|
Total |
8,259,700 |
|
| ========== |
|
|
========== |
|
|
| Categories
of Shareholders |
|
| As
at 30 June 1998 |
|
|
| Categories |
|
No. of |
|
|
|
|
Shareholders |
Share held |
Percentage |
|
|
|
|
|
| Individuals |
|
731 |
866,700 |
10.4931 |
|
| Insurance
Companies |
|
1 |
337,700 |
4.0885 |
|
| Joint
Stock Companies |
|
6 |
4,257,800 |
51.5491 |
|
| Financial
Institutions |
|
6 |
2,296,500 |
27.8037 |
|
| Modaraba |
|
1 |
1,000 |
0.0121 |
|
| Foreign
Companies |
|
1 |
500,000 |
6.0535 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
746 |
8,259,700 |
100.000 |
|
|
|
========== |
========== |
========== |
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|
|
| Chairman's
Review |
|
|
| I
am pleased to present before you the seventh annual report of the company
together with the |
|
| audited
account for the year ended 30th June, 1998, |
|
|
| AN
OVERVIEW: |
|
| During
the past few years, our economy has been passing through a recessionary
phase. The present |
|
| government
is trying its best for the revival of economic activities, but it is facing
difficulties in |
|
| accomplishment
of its objectives. However, during the financial year 1997-98, the economic |
|
| indicators
showed a positive sign, but the overall industry remained stagnant. |
|
|
| The
decision of nuclear detonation was the major event of the year. It was
immediately followed by |
|
| sanctions
imposed on Pakistan, which resulted in further deterioration of an already
frail economy. |
|
| The
freeze of dollar accounts also had negative impact on the economic activities
and created an |
|
| atmosphere
of uncertainty in the country. The aftermath of the nuclear explosion was
worse on the |
|
| economy
in general and on the financial sector in particular. Your company was also
no exception |
|
| to it. |
|
|
| During
the year under review, your company faced some tough times and found it
difficult to |
|
| maintain
the growth, as achieved in previous years. The stagnancy in the economy had
its toll on |
|
| your
company as well, Due to a crises-like situation in the financial sector, it
was extremely difficult to |
|
| borrow
funds from various institutions. The financial institutions also increased
their lending rates on |
|
| one
hand and on the other hand, competition reduced the mark-up rate charged to
the quality |
|
| customers
by the leasing companies, thus reducing their margins and spreads. The
availability of |
|
| quality
customers also became scarce. The air of uncertainty that prevailed in the
country also made |
|
| the
leasing business very difficult. |
|
|
| REVIEW
OF OPERATIONS: |
|
| The
business of your company was affected by the overall economic situation of
the country. |
|
| However,
your company managed to survive in these difficult time. Limited leases were
written during |
|
| the
period due to scarcity of funds and quality/credit worthy customers.
Therefore, company ~~~~~ |
|
| adopted
the policy of consolidation, While disbursing the funds, the main objective
of maintaining |
|
| quality
and well diversified lease portfolio remained in the forefront. During the
year, the emphasis |
|
| was
placed on leasing of commercial vehicles, as it provides an edge to the
company due to its |
|
| back-ground
and also commercial vehicles provide additional initial depreciation compared
with |
|
| other
assets, which helps the company in determent of tax liability. |
|
|
| As
on 30th June, 1998, company's lease portfolio amounted to Rs. 512.914
million, out of which |
|
| maximum
outstanding exposure is in the cement sector, which is Rs. 107.345 million or
19.93% followed |
|
| by
textile and transport & communication, amounting to Rs. 84.747 million
and Rs. 65.362 million or |
|
| 15.74%
and 12.14% respectively. The composition of the portfolio constituted 73.81%
in Machinery, |
|
| 13.49%
in commercial Vehicles, 7.04% in equipment and 5.67% in Private Vehicles. The
disbursement |
|
| followed
the pattern of 56.96% in Machinery, 9.20% in Equipment, 25,05% in commercial
Vehicles |
|
| and
8.79% in Private Vehicles. |
|
|
| Recovery
was one of the main concerns of the company, as due to overall stagnation, a
number of |
|
| clients
started delaying their rentals, The company also filed cases against a few
such clients. |
|
| However,
with the timely interference of management and strenuous efforts, recovery
position came |
|
| into
control. |
|
|
| Your
company incurred a loss of Rs. 24.588 million during the year as against Rs.
11,759 million profit |
|
| last
year, The loss has been primarily caused due to certain extraordinary
adjustments aggregating to |
|
| Rs.
28.721 million, which have been incorporated in these accounts in view of
general economic |
|
| conditions
and stock market crises. So as to follow a conservative and prudent approach
in the |
|
| interest
of shareholders despite the firm belief by the management that these
adjustments would |
|
| eventually
reverse and the amounts would be realised. The adjustments were as follows: |
|
|
|
|
|
|
(Rs. in million) |
|
|
|
|
|
|
| 1. Provision
in diminution of long term investments to |
7,760 |
|
| bring
them at market value although diminution is considered |
|
| by
management as temporary. |
|
|
|
| 2. Provision for
doubtful debts in addition to NBFI |
6,456 |
|
| Regulations
for a client in textile sector. |
|
|
|
| 3.
Non-recognition of lease rentals of certain |
|
14,505 |
|
| customers
in cement sector. |
|
---------- |
|
|
|
28,721 |
|
|
|
========== |
|
|
| In
case the above items were not considered, the profit for the year would have
been Rs. 4.133 |
|
| million. |
|
|
| The
major expenses incurred were financial charges and Admin & Operating
expenses, Financial |
|
| charges
stood at Rs. 72.709 million, which increased by 7.97% over the previous year.
The increase is |
|
| mainly
attributed to increase in mark up rates charged by the financial
institutions. Administrative and |
|
| Operating
Expenses amount to Rs. 25.676 million, which also includes separation
benefits for the |
|
| Ex-chairman
and Chief-Executive Officer, expenditure on COIs and the legal matters for
filling of |
|
| cases
against the lessees for recovery of lease rentals. |
|
|
| The
term of directors also expired on 27th June, 1998 and fresh elections were
held on 27th June, |
|
| 1998.
In the election, besides Ghandhara, following nominees of Marubenii
corporation of Japan |
|
| National
Investment Trust and Investment corporation of Pakistan were elected. |
|
|
| Mr.
Michio Kuwahara |
|
Nominee Marubeni |
|
| Mr.
Razi-ur-Rahman Khan |
Nominee NIT |
|
| Mr.
Nasim Beg |
|
Nominee NIT |
|
| Mr.
A. G. Budhani |
|
Nominee ICP |
|
|
| As
mentioned in the last annual report, that your company has been approved in
the credit line |
|
| financial
Sector Intermediation Loan (FSIL) of ADB. During the period, your company
forwarded three |
|
| proposals
for reimbursement, out of which one has already been approved and other two
are under |
|
| process.
However, later this year, i.e. on 30th September, 1998. ADB suspended its
credit line before |
|
| date
and would entertain proposals received upto 30th September, 1998. |
|
|
| FUTURE
PROSPECTS. |
|
| Considering
the overall economic situation, the year ahead, appears to be a difficult one
for the |
|
| country
in general and leasing sector in particular, Trend of consolidation would
continue in the year |
|
| to
come in almost all the sectors of the economy and your company will not be an
exception. |
|
| However,
the company will continue to provide lease financing to quality customers and
specially to |
|
| the
commercial vehicle segment of the market. |
|
|
| STAFF: |
|
| I
would like to appreciate the efforts, hard work and dedication of the
management and all the staff |
|
| members.
which they have extended in the operations of the company even in a difficult
and |
|
| challenging
year. |
|
|
| ACKNOWLEDGMENT: |
|
| I
would like to extend my gratitude toward Regulatory Authorities, DFIs, banks
and investment banks |
|
| for
extending their full cooperation and guidance to the company. |
|
|
|
|
RAZA KULI KHAN KHATTAK |
|
|
|
CHAIRMAN |
|
|
|
|
| Directors'
Report |
|
|
| The
directors have pleasure in submitting the Seventh Annual Report together with
Audited Accounts |
|
| and
the Auditors' Report thereon for year ended 30 June, 1998, |
|
|
| FINANCIAL
RESULTS |
|
|
|
30th June |
30th June |
|
|
|
|
|
1998 |
1997 |
|
|
|
|
| Total
Income |
|
|
|
92,169,383 |
9,982,621 |
|
| Expenses |
|
|
|
114,006,075 |
87,567,614 |
|
|
|
|
|
---------- |
---------- |
|
| Net
(Loss)/Profit before tax |
|
|
(21,836,692) |
12,258,597 |
|
| Taxation |
|
|
|
2,751,715 |
499,131 |
|
|
|
|
|
---------- |
---------- |
|
| (Loss)/Profit
after taxation |
|
|
(24,588,407) |
11,759,466 |
|
| Profit
brought forward |
|
|
|
17,013,682 |
8,146,868 |
|
|
|
|
|
---------- |
---------- |
|
| (Loss)/Profit
available for appropriation |
|
(7,574,725) |
19,906,334 |
|
| Appropriations |
|
|
|
|
|
| Transfer
to statutory reserve |
|
|
- |
2,351,893 |
|
| Transfer
to contingency reserve |
|
|
21,771 |
540,759 |
|
| Dividend
- Nil |
|
|
|
- |
- |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
21,771 |
2,892,652 |
|
|
|
|
|
---------- |
---------- |
|
| Unappropriated
(Loss)/Profit |
|
|
(7,552,954) |
17,013,682 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| AUDITOR'S |
|
| The
present Auditors Messrs. Taseer Hadi Khalid & Co,, Chartered Accountants,
retire and being |
|
| eligible
offer themselves for re-appointment, |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding is annexed. |
|
|
| STAFF |
|
| The
directors would like to place on record their appreciation of the hard work
and dedication of |
|
| staff
members in achieving the results being presented. |
|
|
| For
and on behalf of the Board. |
|
|
|
Haroon A. Zuberi |
|
Raza Kuli Khan Khattak |
|
|
Chief Executive |
|
Chairman |
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Ghandara Leasing Company Limited
(Formerly |
|
| Ghemni
Leasing Company Limited) as at 30 June 1998 and the related profit and loss
account and |
|
| statement
of changes in financial position, together with the notes forming part
thereof, for the year |
|
| then
ended and we state that we have obtained all the information and explanations
which to the |
|
| best
of our knowledge and belief were necessary for the purposes of our audit and
after due |
|
| verification
thereof, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the company as
required by the |
|
| Companies
Ordinance, 1984; |
|
|
| (b)
in our opinion: |
|
|
| (i)
the balance sheet and profit and loss account together with the notes thereon
have been |
|
| drawn
up in conformity with the Companies Ordinance, 1984 and are in agreement with |
|
| the
books of account and are further in accordance with accounting policies
consistently |
|
| applied; |
|
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year |
|
| were
in accordance with the objects of the Company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, |
|
| the
balance sheet, profit and loss account and the statement of changes in
financial position, |
|
| together
with the notes forming part thereof, give the information required by the
Companies |
|
| Ordinance,
1984 in the manner so required and respectively give a true and fair view of
the |
|
| state
of the Company's affairs as at 30 June 1998 and of the Loss and the changes
in financial |
|
| position
for the year then ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980, was |
|
| deducted
by the Company and deposited in the Central Zakat Fund established under
section |
|
| 7
of that Ordinance, |
|
|
|
|
|
TASEER HADI KHALID & CO. |
|
| Karachi:
l0th December, 1998 |
|
CHARTERED ACCOUNTANTS |
|
|
|
|
|
| Balance
Sheet as at 30 June, 1998 |
|
|
|
|
NOTE |
1998 |
1997 |
|
| ASSETS |
|
|
|
|
|
|
| OPERATING
FIXED ASSETS - At cost less |
|
|
| accumulated depreciation |
|
3 |
7,122,415 |
6,673,072 |
|
| LONG TERM DEPOSITS |
|
|
|
230,922 |
247,922 |
|
| LONG
TERM INVESTMENTS |
|
4 |
4,176,036 |
11,935,759 |
|
| NET
INVESTMENT IN LEASE FINANCE - Secured |
5 |
267,815,746 |
326,698,202 |
|
| ADVANCE
AGAINST LEASE COMMITMENTS - Unsecured |
|
7,529,750 |
7,019,470 |
|
| DEFERRED
COST |
|
6 |
948,461 |
1,422,701 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| current
maturity of net investment in leases Finance and |
|
| overdue
lease rentals |
|
7 |
270,743,447 |
200,221,702 |
|
| Federal
investment Bonds |
|
8 |
50,000 |
50,000 |
|
| Shot
Term Advances - Secured |
|
9 |
41,162,413 |
- |
|
| Advances, deposits, prepayments
and |
|
|
| other
receivables |
|
10 |
12,469,915 |
15,737,777 |
|
| Cash
and Bank balances |
|
11 |
422,628 |
61,288,308] |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
324,848,403 |
277,297,787 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
612,671,733 |
631,294,913 |
|
|
|
========== |
========== |
|
|
|
|
| EQUITY
AND LIABILITIES |
|
|
|
|
|
|
| SHARE
CAPITAL |
|
12 |
82,597,000 |
82,597,000 |
|
| SHARE
PREMIUM |
|
|
48,895,500 |
48,895,500 |
|
| RESERVES |
|
13 |
24,002,942 |
24,024,713 |
|
| (ACCUMULATED
LOSS)/UNAPPROPRIATED PROFIT |
|
(7,552,954) |
17,013,682 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
|
|
|
147,942,488 |
172,530,895 |
|
| LONG
TERM FINANCES - Secured |
|
14 |
70,467,595 |
141,946,361 |
|
| CERTIFICATES
OF INVESTMENT |
|
15 |
24,815,250 |
40,260,000 |
|
| LONG
TERM DEPOSITS |
|
16 |
52,747,235 |
56,580,431 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
maturity of long term finances |
|
39,719,723 |
117,830,614 |
|
| Current
maturity of long term deposits |
|
25,257,752 |
15,878,544 |
|
| Certificates
of Investment |
|
15 & 17 |
141,531,740 |
25,325,000 |
|
| Short
term finances - Secured |
|
18 |
63,584,368 |
39,415,458 |
|
| Short
term finances - Unsecured |
|
19 |
23,000,000 |
7,000,000 |
|
| Accrued
expenses and other liabilities |
20 |
19,683,038 |
13,311,616 |
|
| Provision
for taxation |
|
|
3,459,669 |
707,954 |
|
| Unclaimed
Dividend |
|
|
462,875 |
508,040 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
316,699,165 |
219,977,226 |
|
| COMMITMENTS |
|
|
21 |
|
|
|
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
612,671,733 |
631,294,913 |
|
|
|
========== |
========== |
|
|
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
Haroon A. Zuberi |
|
Raza Kuli Khan Khattak |
|
|
Chief Executive |
|
Chairman |
|
|
|
| Profit
and Loss Account for the |
|
| year
ended 30 June, 1998 |
|
|
|
|
NOTE |
1998 |
1997 |
|
| REVENUE |
|
|
|
|
| Lease
revenue |
|
22 |
859,318,231 |
97,361,040 |
|
| Markup
on short term advances |
|
|
5,609,147 |
- |
|
| Other
Income |
|
23 |
6,284,131 |
2,465,171 |
|
|
|
|
---------- |
---------- |
|
|
|
|
92,169,383 |
99,826,211 |
|
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
| Administrative
expenses |
|
24 |
25,676,224 |
15,315,630 |
|
| Financial
charges |
|
25 |
72,709,293 |
67,343,628 |
|
| Amortisation
of deferred cost |
|
|
474,240 |
811,825 |
|
| Provision
against repossessed asset held for sale |
1,566,616 |
- |
|
| Provision
for diminution in value of investments |
7,759,723 |
- |
|
| Provision
for potential lease losses |
|
5,819,979 |
4,096,531 |
|
|
|
|
---------- |
---------- |
|
|
|
|
114,006,075 |
87,567,614 |
|
|
|
|
---------- |
---------- |
|
| (LOSS)/PROFIT
BEFORE TAXATION |
|
|
(21,836,692) |
12,258,597 |
|
|
|
|
|
|
|
| TAXATION |
|
|
|
|
| Current |
|
|
|
14,400,071 |
499,131 |
|
| Prior |
|
|
|
1,311,708 |
- |
|
|
|
---------- |
---------- |
|
|
|
2,751,715 |
499,131 |
|
|
|
---------- |
---------- |
|
| (LOSS)/PROFIT
AFTER TAXATION |
|
(24,588,407) |
11,759,466 |
|
|
|
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
17,013,682 |
8,146,868 |
|
|
|
---------- |
---------- |
|
| (Loss)/Profit
available for appropriation |
|
(7,574,725) |
19,906,334 |
|
|
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
| Statutory
reserve |
|
- |
2,351,893 |
|
| Contingency
reserve |
|
21,771 |
540,759 |
|
|
|
---------- |
---------- |
|
|
|
21,771 |
2,892,652 |
|
| (ACCUMULATED
LOSS)/UNAPPROPRIATED |
|
|
---------- |
---------- |
|
| PROFIT
CARRIED FORWARD |
|
Rupees |
(7,552,954) |
17,013,682 |
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
Haroon A. Zuberi |
|
Raza Kuli Khan Khattak |
|
|
Chief Executive |
|
Chairman |
|
|
|
| Statement
of Changes in Financial Position for the |
|
| for
the year ended 30 June, 1998 |
|
|
|
|
1998 |
1997 |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| (Loss)/Profit
before taxation |
|
(21,836,692) |
12,258,597 |
|
|
|
|
|
|
| Adjustment
for: |
|
|
|
| Depreciation |
|
1,723,782 |
1,603,837 |
|
| Amortisation
of deferred cost |
|
474,240 |
811,825 |
|
| Accrued
mark-up |
|
71,621,896 |
66,636,972 |
|
| Provision
for potential lease losses |
|
5,819,979 |
4,096,531 |
|
| Provision
for diminution in the value of investments |
7,759,723 |
- |
|
| Provision
for separation benefits |
|
1,056,171 |
- |
|
| Provision
for gratuity |
|
4,698,900 |
- |
|
| Provision
against repossessed assets held for sale |
1,566,616 |
- |
|
| Income
on investments |
|
(411,037) |
(1,205,433) |
|
| Gain
on sale of fixed assets |
|
(76,700) |
- |
|
|
|
---------- |
---------- |
|
|
|
72,396,878 |
84,202,329 |
|
|
|
|
|
| CHANGES
IN OPERATING ASSETS AND LIABILITIES |
|
|
| Decrease
in long term deposits |
|
17,000 |
- |
|
| (Increase)
in Investment in lease finance |
|
(6,911,441) |
(27,037,960) |
|
| (Increase)
in overdue lease rentals |
|
(10,547,827) |
(4,060,209) |
|
| (increase)in
advance against lease commitments |
|
(510,280) |
(1,013,811) |
|
| (Increase)
in short term advances |
|
(41,162,413) |
- |
|
| Decrease/(Increase)
in advances, deposits, |
|
|
|
| prepayments
and other receivables |
|
3,897,550 |
(8,244,265) |
|
| Increase
in long term deposits |
|
5,546,012 |
2,814,912 |
|
| (Decrease)/Increase
in accrued expenses and other liabilities |
(1,532,262) |
315,850 |
|
|
|
|
---------- |
---------- |
|
|
|
(51,203,661) |
(37,225,483) |
|
|
|
---------- |
---------- |
|
|
|
21,193,217 |
46,976,846 |
|
| Mark-up
paid |
|
(69,473,283) |
(68,736,780) |
|
| Taxes paid |
|
|
(2,196,304) |
(1,938,891) |
|
|
|
---------- |
---------- |
|
| Net
cash used in operating activities |
|
(50,476,370) |
(23,698,825) |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Additions
to fixed assets |
|
(3,775,817) |
(3,454,789) |
|
| Mark-up
on Federal Investment Bonds |
|
142,500 |
142,500 |
|
| Income
from deposits account |
|
35,334 |
783,154 |
|
| Dividend
Income-net |
|
233,203 |
279,779 |
|
| Proceeds
from sale of fixed assets |
|
1,679,392 |
- |
|
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(1,685,388) |
(2,249,356) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Long
term financing |
|
(149,589,657) |
63,199,413 |
|
| Certificates
of investment |
|
100,761,990 |
65,585,000 |
|
| Short
term financing |
|
40,168,910 |
(79,784,543) |
|
| Dividend
paid |
|
(45,165) |
(11,485,075) |
|
|
|
---------- |
---------- |
|
| Net
cash generated from financing activities |
|
(8,703,922) |
37,514,795 |
|
|
|
---------- |
---------- |
|
| Net
(decrease)/increase in cash and bank balances |
(60,865,680) |
11,566,614 |
|
| Cash
and bank balances at beginning of year |
|
61,288,308 |
49,721,694 |
|
|
|
---------- |
---------- |
|
| Cash
and bank balances at end of year |
Rupees |
422,628 |
61,288,308 |
|
|
|
========== |
========== |
|
|
|
Haroon A. Zuberi |
|
Raza Kuli Khan Khattak |
|
|
|
Chief Executive |
|
Chairman |
|
|
|
|
| Notes
to the Accounts |
|
|
| for
the year ended 30 June, 1998 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| The
Ghandhara Leasing Company Limited was incorporated on ]2 May 1991 as a public
limited |
|
| company
under the Companies Ordinance, 1984 and was listed on all the Stock Exchanges
in |
|
| Pakistan.
During the year ended 30 June 1997, the name of the company was changed from |
|
| Ghemni
Leasing Company Limited to Ghandhara Leasing Company Limited. |
|
|
|
|
| Its
principal activity is leasing of machineries, equipment and vehicles. Other
activities are short |
|
| term
advancing and investment in securities, |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention, |
|
|
| 2.2
Operating Fixed assets and depreciation |
|
| The
cost of operating fixed assets is depreciated over the useful life of related
assets under |
|
| the
declining balance method, A full year's depreciation is charged on assets
acquired |
|
| during
the year, whereas no depreciation is charged in the year of disposal. Gains
and |
|
| losses
on disposal of assets are included in income currently, Normal repairs and
mainte- |
|
| nance
are charged to income as an when incurred. |
|
|
| 2.3
Investments |
|
| Long
term investments are stated at cost less provision for diminution in value to
recognise a |
|
| decline
other than temporary, Short term investments are valued at lower of cost and
mar- |
|
| ket
value determined on an aggregate portfolio basis, Cost is determined on
moving aver- |
|
| age
basis and the market values are taken from closing rates of the Karachi Stock
Ex- |
|
| change
(Guarantee) Limited on the last working day of the income year. |
|
|
| 2.4
Deferred cost |
|
| This
is being amortised over a period of five years. |
|
|
| 2.5
Net investments in lease finance |
|
| This
is stated at cost less specific provision, Specific provision is made in
accordance with |
|
| the
requirements of Non Bank Financial Institutions Regulations issued by the
State Bank of |
|
| Pakistan. |
|
|
|
|
| 2.6
Revenue recognition
i |
|
|
| Lease
revenue |
|
|
|
| The
company follows the finance method in accounting for lease income. Under this
method, |
|
| the
unearned lease income (excess of the sum of total lease rentals and estimated
residual |
|
| value
over the cost of leased assets) is deferred and taken to income over the term
of lease so |
|
| as
to produce a constant periodic rate of return on the outstanding net cash
investment in |
|
| lease. |
|
|
|
|
| Unrealised
lease income is suspended, where necessary, in accordance with the
Requirements |
|
| of
Non Bank Financial Institutions Regulations issued by the State Bank of
Pakistan. Commitment |
|
| charges,
gains on termination of lease contracts, documentation charges, late payment
sur- |
|
| charge
and other lease income are recognised as income when they are realised. |
|
|
| Markup
income |
|
| This
is recognised on a time proportion basis. |
|
|
| Dividend
income |
|
| This
is recognised at the time of closure of share transfer book of the company
declaring the divi- |
|
| dend. |
|
|
| Capital
gains and losses |
|
| These
are recorded on the date of sale of investment. |
|
|
| 2.7
Foreign currencies |
|
| Foreign
currency transactions are translated into Pak Rupees at exchange rate
prevailing on the |
|
| date
of the transaction. Assets and liabilities in foreign currencies at the year
end are translated |
|
| into
Pak Rupees at the rate of exchange prevailing at the balance sheet date,
Exchange gains |
|
| and
losses are included in the profit and loss account currently. |
|
|
| 2.8
Taxation |
|
|
| Current |
|
| The
charge for current taxation is based on taxable income at the current rates
of taxation after |
|
| taking
into account tax credits and tax rebates, if any. Income for the purposes of
computing |
|
| current
taxation is determined under the provisions of the tax laws whereby lease
rentals re- |
|
| ceived
or receivable are deemed to be income. |
|
|
| Deferred |
|
| The
company accounts for deferred taxation using the liability method on all
major timing differ- |
|
| ences,
However, deferred tax debits are not accounted for. |
|
|
| 2.9
Staff retirement benefits |
|
|
| Defined
contribution plan |
|
| The
company operates an approved provident fund scheme for all its eligible
employees, Equal |
|
| monthly
contributions are made, both by the company and its employees, to the fund at
the |
|
| rate
of 7.5 per cent of basic salary. |
|
|
| Defined
benefit plan |
|
| The
company operates an unfunded gratuity scheme covering all its employees who
have |
|
| completed
their minimum qualifying period of services with the company. Provision is
made an- |
|
| nually
to cover its obligation under the scheme. |
|
|
|
| 3.
OPERATING FIXED ASSETS - At cost less accumulated depreciation |
|
|
|
|
COST |
|
DEPRECIATION |
|
|
------------------------------------------------ |
|
----------------------------------------------------- |
|
|
As at 01 |
Additions |
(Disposals) |
As at 30 |
Rate |
As at 01 |
For the |
(Disposals) |
As at 30 |
Written |
|
|
|
July 1997 |
|
|
June 1998 |
|
July 1997 |
year |
|
June 1998 |
down value |
|
|
------------------------------------------------ |
|
as at 30 |
|
|
|
|
June 1998 |
|
|
|
----------------------------------------------------- |
|
| Furniture
and fixtures |
1,164,616 |
62,852 |
- |
1,227,468 |
10% |
428,664 |
122,747 |
- |
551,411 |
676,057 |
|
| Office
equipment |
3,746,240 |
320,348 |
- |
4,066,588 |
10% |
1,030,041 |
406,659 |
- |
1,436,700 |
2,629,888 |
|
| Vehicles |
|
5,563,753 |
3,392,617 |
(2,984,489) |
5,971,881 |
20% |
2,342,832 |
1,194,376 |
(1,381,797) |
2,155,411 |
3,816,470 |
|
|
|
------------------------------------------------ |
|
----------------------------------------------------------- |
| 1998 Rupees |
|
10,474,609 |
3,775,817 |
(2,984,489) |
11,265,937 |
|
3,801,537 |
1,723,782 |
(1,381,797) |
4,143,522 |
7,122,415 |
|
|
|
================================================ |
|
=========================================================== |
| 1997 Rupees |
|
7,019,820 |
3,454,789 |
- |
10,474,609 |
|
2,197,700 |
1,603,837 |
- |
3,801,537 |
6,673,072 |
|
|
================================================ |
|
=========================================================== |
|
| 3.1
DISPOSAL OF FIXED ASSETS |
|
|
| Mode
of disposal |
Cost |
Accumulated |
Book Value |
Sales |
Particulars of buyers |
|
|
|
|
depreciation |
|
Proceeds |
|
|
| As
per employment terms |
314,000 |
201,462 |
112,538 |
112,538 |
Mr. Haroon Ahmed Zuberi |
|
|
|
|
(Chief Executive) |
|
|
|
|
| As
per employment terms |
721,000 |
317,240 |
403,760 |
403,760 |
Mr. Haroon Ahmed Zuberi |
|
|
|
|
(Chief Executive) |
|
|
|
|
| As
per employment terms |
623,589 |
274,379 |
349,210 |
349,210 |
Mr. Mohammad Shabbir
Kasbati |
|
|
|
|
(S.V.P. Finance) |
|
|
|
|
| As
per employment terms |
619,400 |
272,536 |
346,864 |
346,864 |
Mr. Nasiruddin Shuja |
|
|
|
(S.V.P. Marketing) |
|
|
| As
per employment terms |
329,500 |
144,980 |
184,520 |
184,520 |
Mr. Ghanzfar All |
|
|
|
|
(A.V.P. Lease
Administration) |
|
|
|
|
|
| By
negotiation |
329,500 |
144,960 |
184,520 |
235,000 |
Muhammad Jawad |
|
|
|
|
C-201, Heaven Pride, |
|
|
|
|
Fatima Jinnah Colony, |
|
|
|
|
Jamshed Road, Karachi |
|
|
|
|
| Insurance
claim |
47,500 |
26,220 |
21,280 |
47,500 |
Universal Insurance
Company |
|
|
|
|
(an associated company) |
|
|
|
------------------------------------------------ |
|
| 1998 Rupees |
|
2,984,489 |
1,381,797 |
1,602,692 |
1,679,392 |
|
|
|
================================================ |
|
|
| Company
Policy allows the user of car to purchase it at written down value. |
|
|
| 4.
LONG TERM INVESTMENTS |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
| Federal
Investment Bonds |
|
4.1 |
950,000 |
950,000 |
|
| Listed
securities |
|
4.2 |
3,226,036 |
10,985,759 |
|
|
|
|
---------- |
---------- |
|
|
|
|
Rupees |
4,176,036 |
11,935,759 |
|
|
|
|
========== |
========== |
|
|
| 4.1
This investment has been made to meet the liquidity requirement under the
Non-Banking Finan- |
|
| cial
Institutions Regulations issued by the State Bank of Pakistan. The bonds are
maturing from |
|
| December
2001 to April 2005 and carries markup rate of 15 per cent per annum payable
on half |
|
| yearly
basis. The face value of these bonds is Rs. 950,000. |
|
|
| 4.2 Number of |
|
| shares/certificate |
Name of investee |
|
Cost |
|
|
|
|
| 1998 |
1997 |
Mutual Funds |
|
1998 |
1997 |
|
| 14,100 |
14,100 |
19th ICP Mutual Fund |
|
238,290 |
238,290 |
|
|
|
|
|
|
|
Modarabas |
|
|
| 32,500 |
32,500 |
1st Elite Capital
Modaraba |
|
152,750 |
152,750 |
|
| 51,020 |
51,020 |
1st Punjab Modaraba |
|
471,935 |
471,935 |
|
| 36,500 |
36,500 |
1st Mehran Modaraba |
|
178,850 |
178,850 |
|
| 1,070 |
1,070 |
1st HBL Modaraba |
|
7,223 |
7,223 |
|
|
|
|
|
|
|
Leasing companies |
|
|
| 29,200 |
29,200 |
Natover Motor Lease
Limited |
|
292,000 |
292,000 |
|
| 5,500 |
5,000 |
Saudi Pak Leasing company
Limited |
|
103,251 |
103,251 |
|
|
|
|
|
|
|
Investment
companies/Banks |
|
| 3,681 |
2,945 |
Al-Faysal Investment Bank
Limited |
|
113,383 |
113,383 |
|
| 30,500 |
30,500 |
Al-Towfeek Investment
Bank Limited |
|
800,625 |
800,625 |
|
| 18,975 |
16,500 |
Bank Al-Habib Limited |
|
588,750 |
588,750 |
|
| 2,145 |
2,145 |
Crescent Investment Bank
Limited |
|
83,655 |
83,655 |
|
| 36,500 |
36,500 |
Pakistan Industrial
Credit & Investment Corp. Ltd. |
958,125 |
958,125 |
|
| 15,208 |
15,208 |
Prime Commercial Bank
Limited |
|
324,875 |
324,875 |
|
|
|
|
|
|
|
Textile spinning |
|
|
| 5,000 |
5,000 |
Faisal Spinning Mills
Limited |
|
76,250 |
76,250 |
|
| 4,536 |
4,124 |
Saif Textile Mills
Limited |
|
10,305 |
10,305 |
|
|
|
|
|
|
|
|
Textile composite |
|
|
| 69 |
69 |
Kohinoor Textile Mills
Limited |
|
966 |
966 |
|
|
|
|
|
|
|
Sugar and allied |
|
|
| 1,710 |
1,710 |
Sanghar Sugar Mills
Limited |
|
36,604 |
36,604 |
|
| 2,156 |
2,156 |
Shahmurad sugar Mills
Limited |
|
27,000 |
27,000 |
|
|
|
|
|
|
|
Cement |
|
|
| 52,625 |
52,625 |
Cherat Cement Company
Limited |
|
3,104,875 |
3,104,875 |
|
| 17,480 |
17,480 |
D.G. Khan Cement Co.
Limited |
|
744,072 |
744,072 |
|
| 17,787 |
16,170 |
Essa Cement Industries
Limited |
|
433,400 |
433,400 |
|
|
|
|
|
|
|
Chemical and
pharmaceutical |
|
| 15,000 |
15,000 |
Biafo Industries Limited |
|
157,500 |
157,500 |
|
| 5,000 |
5,000 |
Wah noble Chemicals
Limited |
|
230,000 |
230,000 |
|
|
|
|
|
|
|
Paper and board |
|
|
| 26,400 |
26,400 |
Century Paper & Board
Mills Limited |
|
907,500 |
907,500 |
|
|
|
|
|
|
|
Energy |
|
|
| 39,146 |
34,040 |
Sui Northern Gas
Pipelines Limited |
|
943,575 |
943,575 |
|
|
|
|
---------- |
---------- |
|
|
|
10,985,759 |
10,985,759 |
|
|
Provision for diminution
in value |
|
(7,759,723) |
- |
|
|
|
---------- |
---------- |
|
|
|
Rupees |
3,226,036 |
10,985,759 |
|
|
|
|
========== |
========== |
|
|
|
| 4.3
All the holdings are in modaraba certificates and ordinary shares of Rs. 10
each. |
|
|
| 4.4
The aggregate market value of investments in listed securities as at 30 June
1998 amounted to |
|
| Rs.
3,226,036 (1997: Rs. 5,699,636). |
|
|
| 5.
NET INVESTMENT IN LEASE FINANCE |
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
| Lease
rentals receivable |
|
|
572,525,622 |
582,510.50 |
|
| Residual
value |
|
|
78,004,987 |
72,458,975 |
|
|
|
|
---------- |
---------- |
|
| Minimum
lease payments |
|
|
650,530,609 |
654,969,473 |
|
| Unearned
income |
|
|
(125,961,471) |
(137,311,776) |
|
|
|
|
---------- |
---------- |
|
| Present
value of minimum lease payments |
|
524,569,138 |
517,657,697 |
|
| Current
maturity |
|
|
(245,098,259) |
(185,124,341) |
|
| Provision
for potential lease losses |
|
(11,655,133) |
(5,835,154) |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
267,815,746 |
326,698,202 |
|
|
|
|
|
|
========== |
========== |
|
|
| 5.1
In terms of the requirements of Rule 7(1)(ii) of the Leasing Companies
(Establishment and |
|
| Regulations)
Rules, 1996, the company's aggregate exposure under lease financing |
|
| exceeding
20 per cent of the paid up capital and free reserves in respect of two public |
|
| limited
companies amounted to Rs. 76,405,814 (1997: two public limited companies |
|
| Rs.99,920,000). |
|
|
|
|
|
|
| 6.
DEFERRED COST |
|
|
|
| Cost
incurred |
|
|
5,747,087 |
5,747,087 |
|
| Amortised
to date |
|
|
(4,798,626) |
(4,324,386) |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
948,461 |
1,422,701 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| 7.
CURRENT MATURITY OF NET INVESTMENT IN |
|
|
| LEASE
FINANCE AND OVERDUE LEASE RENTALS |
|
|
| Current
maturity of net investment in lease finance |
245,098,259 |
185,124,341 |
|
| Overdue
lease rentals |
|
|
25,645,188 |
15,097,361 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
270,743,447 |
200,221,702 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| 8.
FEDERAL INVESTMENT BONDS |
|
|
| These
bonds have matured. |
|
|
|
|
|
| 9.
SHORT TERM ADVANCES-SECURED |
|
|
| This
represents financing given to a private limited company and individuals for
three months and |
|
| carries
mark-up at rates ranging from 21 per cent to 25 per cent per annum payable on
maturity. |
|
| The
advances are secured by pledge of cars. mortgage of building (owned by an
associated |
|
| company)
and lien on certificates of investment issued by the company itself. |
|
|
|
|
| 10.
ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES |
|
| Advances |
|
|
|
|
| Staff |
|
|
|
128,500 |
286,000 |
|
| Taxation |
|
|
|
4,582,941 |
2,386,637 |
|
| Others |
|
|
|
120,710 |
844,940 |
|
| Deposits |
|
|
|
328,000 |
- |
|
| Prepayments |
|
|
|
1,373,803 |
226,583 |
|
|
|
|
| Accrued
profit on deposit accounts |
|
|
- |
1,584,632 |
|
| Accrued
mark-up on advance against lease commitments |
127,850 |
1,363,234 |
|
| Accrued
mark-up on short term advances |
|
2,109,660 |
- |
|
| Repossessed
asset held for sale |
|
10.1 |
3,500,000 |
8,566,616 |
|
| Others |
|
|
|
198,451 |
479,135 |
|
|
|
|
---------- |
---------- |
|
|
|
|
Rupees |
12,469,915 |
15,737,777 |
|
|
|
|
========== |
========== |
|
|
|
|
|
1998 |
1997 |
|
| 10.1
Repossessed assets held for sale |
|
|
|
|
| As
at 01 July |
|
|
5,066,616 |
8,566,616 |
|
| Provision
against repossessed assets held for sale |
(1,566,616) |
- |
|
|
|
|
---------- |
---------- |
|
| As
at 30 June |
|
Rupees |
3,500,000 |
8,566,616 |
|
|
|
|
========== |
========== |
|
|
| This
represents value of an asset (1997: two assets) repossessed by the company in
settlement of |
|
| the
outstanding dues of defaulting lessee. The carrying value has been reduced in
accordance |
|
| with
the value realised on similar assets disposed off during the current year. |
|
|
|
|
| 11.
CASH AND BANK BALANCES |
|
|
|
|
|
| Cash
with State Bank of Pakistan |
|
11.1 |
100,000 |
100,000 |
|
| Cash
with commercial banks in current accounts |
|
318,717 |
61,188,308 |
|
| Cash
in hand |
|
|
3,911 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
422,628 |
61,288,308 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| 11.1
This has been kept to meet the liquidity requirements under the Non Bank
Financial |
|
| Institutions
Regulations issued by the State Bank of Pakistan. |
|
|
|
|
| 12.
SHARE CAPITAL |
|
|
|
|
|
|
| Authorised |
|
|
|
| 20,000,000
ordinary shares of Rs. 10 each |
|
200,000,000 |
200,000,000 |
|
|
|
|
========== |
========== |
|
| Issued
subscribed and paid up |
|
|
| 8,259,700
ordinary shares of Rs. 10 each |
|
| Fully
paid in cash |
|
Rupees |
82,597,000 |
82,597,000 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 13.
RESERVES |
|
|
|
|
|
|
|
|
| Statutory
reserve |
|
13.1 |
13,511,559 |
13,511,559 |
|
| Contingency
reserve |
|
13.2 |
10,491,383 |
10,513,154 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
24,002,942 |
24,024,713 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 13.1
Statutory reserve |
|
|
|
|
| As
at 01 July |
|
|
13,511,559 |
11,159,666 |
|
| Transferred
from profit and loss account |
|
- |
2,351,893 |
|
|
|
|
---------- |
---------- |
|
| As
at 30 June |
|
Rupees |
13,511,559 |
13,511,559 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| In
accordance with the Non Bank financial Institutions Regulations issued by the
State Bank of |
|
| Pakistan,
company is required to transfer 20 per cent of its after tax profit to
statutory reserve until |
|
| the
reserve equals its paid up share capital. Thereafter, 5 per cent of profit
after tax is required to |
|
| be
transferred to reserve. |
|
|
|
|
|
| 13.2
Contingency reserve |
|
|
|
|
|
| As
at 01 July |
|
|
10,513,154 |
9,972,395 |
|
| Transferred
(to)/from profit and loss account |
|
(21,771) |
540,759 |
|
|
|
|
---------- |
---------- |
|
| As
at 30 June |
|
Rupees |
10,491,383 |
10,513,154 |
|
|
|
|
========== |
========== |
|
|
| This
is being maintained at the rate of 2 per cent of the present value of minimum
lease payments |
|
| as
an appropriation from profit available for appropriation for potential lease
losses which can |
|
| reasonably
be anticipated. |
|
|
|
|
|
|
1998 |
1997 |
|
| 14.
LONG TERM FINANCES-SECURED |
|
|
| From
a commercial bank |
|
|
|
|
|
|
| Finance A |
|
14.1 |
48,340,730 |
44,599,773 |
|
|
|
|
|
|
| From
financial institutions |
|
|
|
|
| Finance B |
|
14.2 |
6,543,693 |
11,927,202 |
|
| Finance C |
|
14.3 |
18,302,895 |
25,000,000 |
|
| Finance D |
|
14.4 |
10,000,000 |
20,000,000 |
|
| Finance E |
|
14.5 |
7,500,000 |
15,000,000 |
|
| Finance F |
|
14.6 |
9,500,000 |
- |
|
| Finance G |
|
14.7 |
10,000,000 |
- |
|
| Various
finances |
|
|
- |
143,250,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
110,187,318 |
259,776,975 |
|
|
|
|
|
| Current
maturity |
|
|
(39,719,723) |
(117,830,614) |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
70,467,595 |
141,946,361 |
|
|
|
|
========== |
========== |
|
|
| 14.1
This represents a running finance facility of Rs. 50,000,000 obtained from a
commercial bank |
|
| and
carries markup at a rate of 21.5 per cent per annum payable on half yearly
basis. The |
|
| facility
is repayable by December 1999. The facility is secured by hypothecation of
leased |
|
| assets,
irrevocable assignment of rentals receivable under lease contracts and
floating |
|
| charge
on current assets of the company. |
|
|
| 14.2
This represents a funding line obtained from a development finance
institution and carries |
|
| markup
at a rate of 20 per cent per annum. The principal and markup is payable in
sixteen |
|
| equal
quarterly installments of Rs. 1,845,398 from September 1995 to June 1999. The
funding |
|
| line
is secured by hypothecation of leased assets, irrevocable assignment of
rentals |
|
| receivable
under lease contracts and floating charge on current assets of the company. |
|
|
| 14.3
This represents a funding line obtained from a development finance
institution and carries |
|
| markup
at a rate of 21 per cent per annum. The principal and markup is payable in
twelve |
|
| equal
quarterly installments of Rs. 2,860,545 from September 1997 to June 2000. The
funding |
|
| line
is secured by hypothecation of leased assets, irrevocable assignment of
rentals |
|
| receivable
under lease contracts and floating charge on current assets of the company. |
|
|
| 14.4
This represent a morabaha financing obtained from an investment bank. The
mark up is |
|
| payable
on quarterly basis and the mark up rate for next quarter is reviewed at each |
|
| payment
of markup. The markup rate for quarter ended September 1998 is 21 per cent
per |
|
| annum.
The principal is payable in four equal half yearly installments of Rs.
5,000,000 from |
|
| June
1997 to March 1999. The morabaha financing is secured by first charge ranking
parri |
|
| passu
over present and future leased assets and rentals receivable under lease
contracts of |
|
| the
company. |
|
|
| 14.5
This represent a morabaha financing obtained from an investment bank. The
mark up is |
|
| payable
on quarterly basis and the mark up rate for next quarter is reviewed at each |
|
| payment
of markup. The markup rate for quarter ended August 1998 is 21 per cent per |
|
| annum.
The principal is payable in four equal half yearly installments of Rs.
3,750,000 from |
|
| November
1997 to May 1999. The morabaha financing is secured by first charge ranking
parri |
|
| passu
over present and future leased assets and rentals receivable under lease
contracts of |
|
| the
company. |
|
|
| 14.6
This represent a morabaha financing obtained from an investment bank. The
mark up is |
|
| payable
on quarterly basis and mark up rate for next two quarters is reviewed on half
yearly |
|
| basis
by adding 1 per cent to the prevailing discounting rate of the State Bank of
Pakistan |
|
| with
the floor of 19.5 per cent per annum. The mark-up rate for half year ending
Dec. 1998 is |
|
| 19.5
percent per annum. The principal is payable in four equal half yearly
installments of Rs. |
|
| 2,375,000
from Dec. 1998 to June 2000. The morabaha financing is secured by first
charge |
|
| ranking
parri passu over leased assets of the company. |
|
|
| 14.7
This represents a credit facility obtained from a development finance
institution and carries |
|
| markup
at a rate of 20 per cent per annum. The principal and markup is payable in
twelve |
|
| equal
quarterly installments of Rs. 1,128,254 from July 1998 to April 2001. |
|
|
| 15.
CERTIFICATES OF INVESTMENT |
|
| These
represent the mobilization of funds under the scheme of certificates of
investment |
|
| introduced
with the permission of Corporate Law Authority. The certificates are for
terms ranging |
|
| from
three months to five years and carry profit ranging from 16 per cent to 24
per cent per |
|
| annum.
These include certificates of investment of Rs. 20,000,000 (1997: Rs.
40,000.000) issued to |
|
| various
financial institutions. |
|
|
|
|
1998 |
1997 |
|
| 16.
LONG TERM DEPOSITS |
|
|
|
|
|
|
| Lease
key money |
|
16.1 |
78,004,987 |
72,369,903 |
|
| Current
maturity |
|
|
(25,257,752) |
(15,878,544) |
|
|
|
|
---------- |
---------- |
|
|
|
|
52,747,235 |
56,491,359 |
|
| Others |
|
|
- |
89,072 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
52,747,235 |
56,580,431 |
|
|
|
|
========== |
========== |
|
|
|
|
| 16.1
This represents interest free security deposits received from lessees against
lease contracts |
|
| and
are refundable/adjustable at the expiry/termination of the respective leases. |
|
|
|
|
| 17.
CERTIFICATES OF INVESTMENT |
|
|
| These
include certificates of investment of Rs. 140,000,000. (1997: Rs.
25,000,000)issued to various |
|
| financial
institutions. |
|
|
|
|
|
| 18.
SHORT TERM FINANCES-SECURED |
|
|
| From
commercial banks |
|
|
|
|
|
|
| Finance A |
|
18.1 |
29,584,368 |
29,415,458 |
|
| Finance B |
|
18.2 |
4,000,000 |
- |
|
|
|
|
|
|
| From
financial institutions |
|
|
|
|
|
|
|
|
|
| Finance C |
|
18.3 |
20,000,000 |
- |
|
| Finance D |
|
18.4 |
10,000,000 |
- |
|
| Finance E |
|
|
- |
10,000,000 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
63,584,368 |
39,415,458 |
|
|
|
|
========== |
========== |
|
|
| 18.1
This represents a running finance facility of RS. 30,000,000 obtained from a
commercial bank |
|
| and
carries markup at a rate of 18.5 percent per annum payable on quarterly
basis. The |
|
| facility
is repayable by November 1998. The facility is secured by hypothecation of
leased |
|
| assets
of the company. |
|
|
| 18.2
This represents a demand finance obtained from a commercial bank and carries
markup at |
|
| a
rate of 19.5 per cent per annum payable on quarterly basis. The demand
finance is for one |
|
| year
and will mature in October 1998. The demand finance is secured by first
charge ranking |
|
| pari
passu over leased assets and rentals receivable under lease contracts of the
company. |
|
|
|
|
| 18.3
This represents a promissory note discounting facility obtained from an
investment bank and |
|
| carries
mark up at a rate of 21 per cent per annum payable on quarterly basis. The
principal |
|
| is
payable in five equal quarterly installments of Rs. 2,000,000 by September
1998. |
|
|
|
|
| The
discounting facility is secured by first charge ranking parri passu over
leased assets and |
|
| rentals
receivable under lease contracts of the company. |
|
|
|
|
| 18.4
This represents a placement made by a venture capital company and carries
markup at a |
|
| rate
of 18.75 per cent per annum payable on half yearly basis. The placement is
for one year |
|
| and
will mature in October 1998. The placement is secured by first charge ranking
parri passu |
|
| over
the leased assets of the company. |
|
|
|
|
|
|
1998 |
1997 |
|
| 19.
SHORT TERM FINANCES - UNSECURED |
|
|
|
|
| Finance A |
|
19.1 |
15,000,000 |
- |
|
| Finance B |
|
19.2 |
5,000,000 |
- |
|
| Finance C |
|
19.3 |
3,000,000 |
- |
|
| Various
finances |
|
|
- |
7,000,000 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
23,000,000 |
7,000,000 |
|
|
|
|
========== |
========== |
|
|
|
|
| 19.1
This represents a placement made by a venture capital company and carries
markup at a |
|
| rate
of 21 per cent per annum payable on maturity. The placement is for three
months and |
|
| maturing
in July 1998. |
|
|
|
|
|
|
| 19.2
This represents a placement made by a constituent and carries markup at a
rate of 20 per |
|
| cent
per annum payable on maturity. The placement is for three months and maturing
in |
|
| July 1998. |
|
|
|
|
|
|
| 19.3
This represents a musharaka finance obtained from a modaraba and carries
markup at a |
|
| rate
of 20 per cent per annum payable on maturity. The musharaka finance is for
one month |
|
| and
maturing in July 1998. |
|
|
|
|
|
| 20.
ACCRUED EXPENSES AND OTHER LIABILITIES |
|
|
|
|
| Accrued
markup on long term finances |
|
622,119 |
4,724,478 |
|
| Accrued
markup on shot term finances |
|
2,415,933 |
1,513,881 |
|
| Accrued
markup on certificates of investment |
|
7,168,417 |
1,819,497 |
|
| Advance
lease rentals |
|
|
2,336,991 |
3,291,983 |
|
| Auditors'
remuneration |
|
|
50,000 |
40,000 |
|
| Tax
deducted at source |
|
|
358,168 |
49,784 |
|
| Excise
duty on lease rentals |
|
|
158,891 |
233,618 |
|
| Unearned
front end fee |
|
|
392,023 |
390,389 |
|
| Bonus |
|
|
- |
236,315 |
|
| Provision
for gratuity |
|
|
1,056,171 |
- |
|
| Provision
for separation benefits |
|
|
4,698,900 |
- |
|
| Others |
|
|
425,425 |
1,011,671 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
19,683,038 |
13,311,616 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| 21.
COMMITMENTS |
|
|
|
|
| Commitments
for lease disbursements |
Rupees |
10,130,000 |
15,500,000 |
|
|
|
|
========== |
========== |
|
|
|
| 22.
LEASE REVENUE |
|
|
|
| Lease
income |
|
|
84,215,567 |
92,791,501 |
|
| Commitment
charges |
|
|
450,000 |
100,000 |
|
| Markup
on advance against lease commitments |
|
126,658 |
3,273,726 |
|
| Gain
on cancellation of lease contracts |
|
4,224 |
79,317 |
|
| Documentation
charges |
|
|
112,000 |
106,000 |
|
| Late
payment surcharge |
|
|
1,008,441 |
954,363 |
|
| Other
lease income |
|
|
14,933 |
56,133 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
85,931,823 |
97,361,040 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 23.
OTHER INCOME |
|
|
|
| Mark-up
on Federal Investment Bonds |
|
142,500 |
142,500 |
|
| Profit
on deposit accounts |
|
|
35,334 |
783,154 |
|
| Dividend
income |
|
|
233,203 |
279,779 |
|
| Gain
on disposals of fixed assets |
|
|
76,700 |
|
|
| Exchange
gain |
|
|
- |
1,208,241 |
|
| Others |
|
|
140,676 |
51,497 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
628,413 |
2,465,171 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 24.
ADMINISTRATIVE EXPENSES |
|
|
|
| Salaries
and other benefits |
|
|
6,299,261 |
5,570,658 |
|
| Separation
benefits |
|
24.1 |
4,698,900 |
- |
|
| Staff
gratuity |
|
|
1,056,171 |
- |
|
| Staff
welfare and training |
|
|
718,613 |
986,782 |
|
| Bonus |
|
|
- |
238,044 |
|
| Rent,
rates and taxes |
|
|
1,610,333 |
1,020,567 |
|
| Travelling
and conveyance |
|
|
1,609,137 |
1,558,619 |
|
| Legal
and professional |
|
|
1,199,732 |
588,772 |
|
| Telephone,
telex and postage |
|
|
661,488 |
542,815 |
|
| Printing
and stationery |
|
|
668,309 |
424,911 |
|
| Depreciation |
|
|
1,723,782 |
1,603,837 |
|
| Fees
and subscription |
|
|
338,346 |
244,213 |
|
| Utilities |
|
|
590,384 |
605,822 |
|
| Advertisement |
|
|
1,146,524 |
276,989 |
|
| Auditors'
remuneration |
|
24.2 |
81,980 |
90,000 |
|
| Repairs
and maintenance |
|
|
772,561 |
417,135 |
|
| Entertainment |
|
|
341,067 |
211,780 |
|
| Insurance |
|
|
724,000 |
488,790 |
|
| General
expenses |
|
|
806,321 |
445,896 |
|
| Zakat |
|
|
629,315 |
- |
|
|
|
|
---------- |
---------- |
|
|
Rupees |
25,676,224 |
15,315,630 |
|
|
|
|
========== |
========== |
|
|
| 24.1
These represent separation benefits subsequently paid to the Ex-Chairman
amounting to |
|
| Rs.630,000
and payable to the Chief Executive amounting to Rs. 4,068,900. They are also |
|
| entitled
to purchase cars in their use at Rs. 1 each. These separation benefits have
been |
|
| approved
by the Board of Directors and shareholders of the company. |
|
|
|
|
| 24.2
Auditors' remuneration |
|
|
|
|
|
| Statutory
audit fee |
|
|
50,000 |
40,000 |
|
| out
of pocket expenses |
|
|
31,980 |
- |
|
| Special
audit fee |
|
|
- |
50,000 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
81,980 |
90,000 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 25.
FINANCIAL CHARGES |
|
|
|
| Mark
up on Long term finances |
|
|
26,382,449 |
36,155,033 |
|
| Short
term finances |
|
|
16,170,670 |
18,620,193 |
|
| Certificates
of investment |
|
|
29,068,777 |
11,861,746 |
|
| Bank
charges |
|
|
1,087,397 |
706,656 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
72,709,293 |
67,343,628 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 26.
TAXATION |
|
|
|
| In
view of tax loss from lease operation for the current year, tax on other
income has been |
|
| provided
at the applicable tax rate. |
|
|
|
|
| The
income tax assessments of the company have been finalised upto and including
assessment |
|
| year
1997-98 (income year ended 30 June 1997). The income tax department has filed
appeals |
|
| for
the assessment years 1995-96 and 1996-97 with Income Tax Appellate Tribunal
against the |
|
| decisions
made by the Commissioner of Income Tax (Appeals). The company has also filed |
|
| appeals
for the same assessment years and for assessment 1994-95 with Income Tax
Appellate |
|
| Tribunal
against certain disallowances retained by the Commissioner of Income Tax
(Appeals). In |
|
| addition
to these assessment years. the company is in process of filing an appeal for
the |
|
| assessment
year 1997-98 with Commissioner of Income Tax (Appeals). In case of adverse
decision, |
|
| an
additional tax liability of Rs. 4,103,134 would arise which has not been
provided in these |
|
| accounts
as the management expects a favorable outcome. |
|
|
|
|
| As
on 30 June 1998, net taxable temporary differences amounted to approximately
Rs. |
|
| 63,070,229.
However, no accrual for deferred tax liability has been made in these
accounts due |
|
| to
carry forward of unused tax losses of Rs. 86,041,627 approximately. |
|
|
|
|
| 27.
TRANSACTIONS WITH ASSOCIATED COMPANIES |
|
|
|
|
| Lease
income |
|
Rupees |
23,108 |
108,468 |
|
|
|
|
========== |
========== |
|
| Insurance
premium |
|
Rupees |
585,916 |
155,752 |
|
|
|
|
========== |
========== |
|
| Lease
disbursed |
|
Rupees |
- |
1,344,810 |
|
|
|
|
========== |
========== |
|
|
|
| 28.
REMUNERATION OF CHIEF EXECUTIVE AND EXECUTIVES |
|
|
|
|
Chief Executive |
Executives |
|
|
|
---------------------------------------------------- |
|
|
|
1998 |
1997 |
1998 |
1997 |
|
|
|
---------------------------------------------------- |
|
| Managerial
remuneration |
828,000 |
828,000 |
736,392 |
561,896 |
|
| House rent |
|
372,000 |
372,000 |
327,744 |
244,010 |
|
|
|
|
|
| Provided
fund |
|
62,100 |
62,100 |
54,648 |
29,741 |
|
| Utilities |
|
82,800 |
82,800 |
72,852 |
58,572 |
|
| Medical |
|
82,800 |
82,800 |
46,806 |
38,225 |
|
| Others |
|
84,000 |
84,000 |
- |
- |
|
| Separation
benefit |
|
4,068,900 |
- |
- |
- |
|
| Gratuity |
|
759,000 |
- |
- |
- |
|
|
|
---------------------------------------------------- |
|
| Rupees |
|
6,339,600 |
1,511,700 |
1,238,442 |
932,444 |
|
|
|
==================================================== |
|
| Number
of persons |
|
1 |
1 |
2 |
2 |
|
|
|
|
==================================================== |
|
|
| The
chief executive and executives were also entitled to free use of company
maintained Cars. |
|
|
| The
Chairman was entitled for emolument of Rs. 35,000 per month. |
|
|
| The
aggregate amount of fee paid to nine non salaried directors was Rs. 12,000
(1997: Rs. 19,500). |
|
|
| Medical
insurance cover was also provided to all executives, |
|
|
| 29.
YEAR 2000 COMPLIANCE OF COMPUTER SYSTEM |
|
| The
company is considering the impact of year 2000 issue on its computer systems
and applica- |
|
| tions
and would develop a remediation plan. |
|
|
| 30.
COMPARATIVE FIGURES |
|
| Figures
of the previous year have been rearranged, wherever necessary, to facilitate
comparison. |
|
|
| Figures
have been rounded off to the nearest rupee. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
